Big Day For The Big House

It was a surprisingly busy July day for Michigan's Athletic Department, as they opened the doors to Michigan Stadium's new premium seating areas, FieldTurf announced a new deal with the Wolverines (way to piggyback off the day's news, guys!), the official seating capacity of 109,901 was announced for the 2010 season, and Athletic Director David Brandon held a press conference to talk about the newest features of Wolverine Mecca. It's all stadium, all day.

Apologies for poor photo quality, as cellphone shots will have to stand in for the out-of-commission pro camera. If it's higher-quality shots you want, UMTailgate can hook you up. Firstly, I was surprised how many people showed up to the event in the first place, many of them decked out in their gameday garb. Pioneer's lot was mostly filled up in the late morning.

Structures

Athletic Director Dave Brandon said that the structures will help keep crowd noise in the stadium, a welcome (but by no means novel anymore) idea to Michigan fans. He said that sound engineers estimated a 30% increase in volume at the 50-yard line, but to get more concrete data, they'll test the sound early in the year.

Another note about the structures themselves is the classic look. Brandon noted that the aesthetic fit with the rest of athletic campus (seen at right from the fourth floor of the East structure) makes the look perfect for Michigan.

Adding these structures also helped Michigan provide a variety of gameday experiences for fans with different preferences. Those who want to sit in traditional bleachers can continue to do so, but there are also options for those who want - and can afford - to sit in chairback seats, club seats, or suites.

Of the 81 total suites, only 20 are available at this time. Approximately 60% of the suites have been purchased by individuals or small groups, and 40% are for corporate customers. Associate Athletic Director for Development Joe Parker said that is a pretty good reservation number, and he does not anticipate single-game suite rentals becoming an option to fill them all.

When other schools have added premium seating, and even when Michigan added it at Yost Ice Arena, 100% occupancy hasn't been reached until the third year. Michigan should have all 81 suites committed by then.

Meta

I know lots of MGoBloggers are interested in the behind-the-scenes media access stuff, so here's a shot of the new press box. It's a decided improvement over the old one, to say the least:

There's another row on the left there, and the ceilings are a good 15-20 feet high. In addition, AD Dave Brandon (jokingly) promised that the media will have better food options this season.

The Numbers

At this point, capital gifts and suite/club seat reservations have paid for the $226 million of the renovations(!). The rest of the way, these income sources should be positive cashflow for the Athletic Department. Though he didn't have exact numbers, Parker said that the premium seating areas will increase the profitability of each home game in the future.

What's Next?

Inside the stadium, the 2009 Michigan/Notre Dame game was displayed on the scoreboards as the fans made their way through the new premium seating areas in the East Side structure. Those scoreboards might not be long for this world, according to Dave Brandon. The Athletic Department is already discussing further expansion of the stadium, but the scoreboards are going to be the next part of the stadium improved.

Brandon said he hopes that the existing architecture of the scoreboards can be maintained (speculation - so as to not waste money when stadium expansion forces them to move within a few years?), but it's time for them to be upgraded. The Athletic Department will explore all possible revenue streams to pay for that project, though there are currently no plans for in-stadium advertising.

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If home games become more profitable, do you think they'll get so profitable as to allow the athletic department to sacrifice one every other year or so to schedule another quality non-conference game?

The trend in BCS conferences seems to be scheduling premium foes at neutral sites to maximize revenue for both teams. I suspect we will see fewer non-conference home-and-homes other than ND, and more 1-offs at places like Giants Stadium, FedEx Field, Soldier Field, etc.

Not disagreeing with you, Danross (if that is, indeed, your real name), but that neutral site strategy will interfere with 3-4 OOC home games and 4-5 Big Ten home games.

I'd imagine a significant portion of the financial assumptions were made with an 8 home game slate annually, for the next decade or two, at least. (IMHO, I can't see where Michigan not playing at home is a financial winner compared to a split gate at a neutral site.)

I assume you're talking about a good to high quality program in a BCS conference and that would mean a second home-and-home series in addition to playing Notre Dame.

If the Big Ten opts to schedule nine conference football games starting 2011 with the addtion of Nebraska to the B10, I doubt you'll see Michigan scheduling a second "quality non-conference game" using the critieria I stated iin the first paragraph. UM would only have three non-conference game slots available and I suspect they would want to have a minimum of seven home games per year. With alternating seasons of four and five B10 home games per season, that means Michigan can only have one home-and-home non-conference opponent. With all that high-priced seating now in place, I don't think the Michigan Athletic Department would want to go to seasons with only six home games.

If the Big Ten sticks with an eight-game conference schedule, there might be a possibility of that happening, but my guess is that it would be slim. Let's face it--from a financial standpoint, if seven home games is good, eight home games is even better in terms of spectator admissions. If the team is playing well (or at this point, even poorly), it won't matter if they're playing a non-conference team from a BCS conference or from the MAC--the attendance numbers don't vary much historially in terms of the opponent. For example, last year, the attendance for the Delaware State game was 106,304 while the finale with Ohio State was 110,992. The other attendance figures were as follows:

Western Michigan - 109,019

Notre Dame - 110,278

Eastern Michigan -107,903

Indiana - 108,118

Penn State - 110, 377

Purdue - 108,543

While we don't know how the future Big Ten Conference schedules are going to pan out (we'll know more in late August), the addition of the Cornhuskers means Michigan might have season where they play the Ohio State, Penn State and Nebraska in conference plus Notre Dame out of conference--all among the winningest programs in CFB. I have a hard time imagining Michigan want to add another quality opponent to a schedule that already includes those teams and the possibility of a conference championship game.

Michigan does currently have a game scheduled at Connecticut on 21 September 2013 and the Notre Dame series does continue onward through 2018 with a break in 2019/2020. Other than that, my guess is that UM's non-conference schedule will largely include ND plus two MAC teams and one buy game. San Diego State was paid $1M to play Michigan on 24 September 2011, for example, as a buy game. If the B10 does go to nine conference games, through, that contest against SDSU might have to be postponed because its on the fourth Saturday of the season with Western Michigan (3 SEP), Notre Dame (10 SEP) and Eastern Michigan (17 SEP) already on the schedule. See http://www.mgoblue.com/sports/m-footbl/spec-rel/081809aab.html

That $1M price tag to play San Diego State illustrates one big problem with these buy games--they're getting expensive. UM typically pays around $500K to the MAC schools to come to Ann Arbor and the Wolverines paid Utah $600K in 2008. But with the going price now at a million, those buy games are getting more costly. While UM has the financial resources to do this, other programs in the Big Ten might not--this would be one big reason for going to a nine-game conference schedule.

What I would like to see Michigan and David Brandon do is to make Notre Dame part of a rotation of major BCS programs on the non-conference schedule. While I appreciate ND's program, I don't hold it in such high reverence that I want to see the Wolverines play them virtually every year from now until 2031 (when the current agreement is scheduled to end). I'd put Notre Dame on the schedule on two years out of every six or eight seasons and bring in other major teams like Texas or Alabama or Miami-FL (all programs which OSU and PSU have recently played or will play in the near future) as well. Mix it up a bit--I'm sure the television networks (and the ratings) wouldn't mind and it sure would add some variety to the schedule that I think most fans would really enjoy.

That section states that capital gifts and suite/club suite reservations have paid for the $226M cost of the renovations.

But the FY 2011 Athletic Department budget states the debt servicing for the project will be around $144M on 30 June 2011. If the renovations have been "paid for", then why is there $144M in debt on the project?

I think the phrase "paid for" is oversimplification to the point of confusion. From AnnArbor.com:

Brandon said the university is "cash ahead" as the revenue generated by the sale of the luxury seats surpasses the debt load for the stadium improvements.

So I don't really think the renovations have been paid for in the sense we normally think (we have no more debt). What this means is that the yearly revenue from just the suites and club seats that have already been reserved is enough to make the yearly payments on the debt.

In this case, "paying for" the renovations means being cash-flow positive. No doubt, they had an occupancy target (tied to the value of the recurring revenue stream) above which, they were in the black.

Page 2 Section 3 of the Michigan FY 2011 Athletic Department budget shows total gift income for FY 2011 at $21.0M with $18.3M coming from PSDs, premium seating and the suites. With the debt servicing at $9.2M for FY 2011, that gives the Athletic Department a positive cash flow of about $9.1M from these sources alone. Also keep in mind that the ticket revenue for the suites and premium seating aren't included in this figure--they're part of the spectator admissions revenue line in the budget.

From the financial side alone, you can see why the Athletic Department is so enthusiastic about the project. One thing the "Save the Big House" folks never appreciated is that the revenue from the higher-priced seating and facilities was going to pay for the entire project. Even if the gifting numbers for FY 2011 was cut in half, the AD would still break even in terms of generating the revenue required to service the debt.

It'll be interesting to see how this project shapes up in the years to come. If the stadium does get up to full occupancy in terms of the suites and premium seating, then this project will end up being extremely lucrative.

To expand on this, a lot of kudos has to be given for Bill Martin on getting this project started and for his financial management of the Athletic Department. He was the on responsible for setting aside $4-plus million per year in a deferred maintenance fund that is now in the neighborhood of $35M. If the AD was ever to go into a prolonged period of financial duress, they would have reserves in the bank.

Martin was also responsible for getting a lot of money donated to the Athletic Department for facilities, etc. Look no further than the indoor football practice facility as a prime example. I'll add one other thing--they didn't adapt the "we eat what we kill" attitude that an athletic department like Texas did. Its clear there were some wise and prudent financial decisions that were made in terms of developing the athletic infrastructure that didn't mean breaking the bank.

I think Michigan's in good shape in terms of the Athletic Department with part of that due to to the Big Ten Conference office and the decision to launch the Big Ten Network as another revenue source for all the B10 schools. Inviting Nebraska to the Big Ten, getting a conference championship football game, etc.--all good moves on their part.

I believe the implication is that the current level of revolving commitments (suites have to be purchased for a minimum of three years and can be purchased for a max of seven) will continue to pay off the cost of the renovations. The AD will not have to dip into any other funds to pay off the structures. They are not searching for money to pay for the renovation.

"We are already looking at future expansion plans to Michigan Stadium," Brandon said. "I personally believe strongly that the next thing that needs attention are the scoreboards. They really look old now and they look undersized and there's new technology, so one of the things I really want to do is thoughtfully consider what we can do in incorporating new scoreboards into the architecture that's there.
"And if there's a way as part of that design to create a few more seats, well look at doing that."

I really hope that they do further exansion correctly, even if they have to wait a while to do it.

I love the new additions, and could see adding a similar "suite" and "club level" structure to the south enzone to increase revenues, attendance and keep even more sound in. I really hope that they add an old school upper deck to the north endzone though (a la Penn State's Beaver Stadium, but with the brick architecture incorporated) so we could put the student section down there and have a REALLY hostile atmosphere.

Then you incorporate a couple of nice state-of-the-art HD scoreboards into the design and you are looking at a great fan experience.

Of course, that photo is awesome because of the stadium, which is now 150% Pure Columbian Awesome. I hope Bill Martin gets a great send-off in September -- Michigan's facilities are far better thanks to his efforts as AD.

Since I'm a photographer, I took a look at his camera gear so I could know exactly how jealous to be. I know for sure the camera was a Canon 5D, and while I don't know for sure which lens it was, I'm reasonably certain it was a Canon 14mm. That amounts to about $4,500 worth of jealousy...for his second camera.

Martin does deserve a lot of the credit. I think Brandon is a great AD, as he seems to be a CEO type that deals well with media, pressure, decisions. Martin was a guy that new how to raise money and get the bottom line to work out. Our facilities have been significantly upgraded on his watch and I think he's done a great job with that. As for the coaches he hired - lets hope they pan out!

Michigan, Ohio State, Illinois, Indiana, Iowa, Minnesota and Wisconsin have FieldTurf installed at their respective football stadiums. Northwestern, Penn State and Purdue have full-sized FieldTurf football fields at their athletic complex/practice facility.

So everyone in the league is using FieldTurf either all the time or when practicing, except those bright minds up the road. Guess they've got to keep those turf-management majors busy.

Arrived at the stadium at 5:00 p.m. Good sized crowd, with a very wide range age demographic. Don't know how the Michigan football crowd compares to other fandom that sells out their stadiums for every home game...we have a lot of old people in the mix. Or people with lotsa $$$ who have aged poorly.

One point I made to my entourage of two...note that we weren't looking at the field with actual players on it. I'd imagine they'll look positively Lilliputian, from that distance and height. We'll see what the commentariat presents. OTOH, suites at JLA are in the stratosphere...think eye-to-eye with SC banners and retired jerseys, and those sold out, year after year, and people loved going to watch games in them. The amenities will probably outweigh some of the negative viewing realities.

Small TV mounted on the posts out of the ceiling in the suites. I'd like something in a 50-60" size, please.

Those west facing club seats could get steamy in September. Maybe not much more than what the fans in the east side of the bowl regularly experience, but on a 94* day in July, steamy.

I can't begin to count how many people walked up to the reps with a little blue or red laminated card with their seating selection. As Joe Parker and Dave Brandon (and I'm sure, Bill Martin prior to easing into sunset mode) said, seeing the structures up, the amenities, the solidity, the first class (First Class!) accoutrements...maybe the Fr**p can make selling 61/81 suites a negative, but don't be surprised when those 20 suites, the club seats and all the other open tickets are sold. And sold for years to come.

All in all, a stellar enhancement to the stadium. Everyone gets something out of this. More room. Better accommodations. Potentially quicker throughput for concessions and other requirements. (I'm hoping people exiting the upper levels of the bowl after the game will go up and out through the structures, making our exits from the lower climes of the bowl a little quicker, too.)